TaxTMI 
TaxTMI 
2012 (3) TMI 343
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....ons assigned by him are wrong and contrary to the provisions of the Income-tax Act, read with judicial propositions. 4. The learned Commissioner of Income-tax (Appeals) has also erred in holding that section 292BB, of the Income-tax Act, 1961, was applicable in the facts of the appellant's case, even though said section was made effective from April 1, 2008." The facts which emerged from the record are as under. The assessee is an individual and engaged in the trading in ferrous and non-ferrous metals. The assessee filed the return of income for the assessment year 2007-08 declaring total income of Rs. 5,86,350 on September 27, 2008. The assessee's case was selected for scrutiny and assessment was completed under section 143(3)(ii) of the Act determining the income of the assessee at Rs. 2,19,36,332. The major addition was made under section 68 of the Act to the extent of Rs. 2,12,81,000. As noted by the Assessing Officer in the assessment order, the assessee was issued notice under section 143(2) of the Act on August 4, 2009. The Assessing Officer also issued notices under section 142(1) of the Act on August 21, 2009, August 19, 2009 and October 1, 2009. The assessee ....
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....s of 13/15, Room No. 27, Anantwadi, 3rd floor, Bhuleshwar, Mumbai was the actual address appearing on permanent account number card, which was submitted by the appellant in form No. 49A for obtaining permanent account number (PAN) and accordingly the address appearing on permanent account number is entered in computer and authorised database of the Income-tax Department and whenever any such notice is generated the same address get printed and accordingly, the Assessing Officer has to send the notice at the address mentioned in permanent account number card. It is basically a fault on the part of the appellant to change suo motu address in the return of income without getting changed the address in permanent account number as mentioned by him in form No. 49A for obtaining permanent account number. It is evident from the written submission and paper book containing 67 pages that there is no mention about the change of any address in permanent account number or required form, therefore, after commitment of such mistake, the appellant cannot be allowed to capitalise the difference of change of address contesting that notice under section 143(2) was not served. It is also worthwhile to....
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....as raised such objection before the completion of such assessment or reassessment.' 3.2.2 It is further important to note that the case of CIT v. M. Chellappan [2006] 281 ITR 444 (Mad) relied upon by the learned authorised representative is not applicable to the facts of the case as briefly mentioned above. In that case, notice under section 143(2) was not served within 12 months in the reassessment proceedings hence, it was held that the Tribunal was right in holding that the reopening of the assessment and the completion of the assessment was not valid. Here, in this case, facts are altogether different. Notice was issued well before the final day of the stipulated time and was served upon the appellant through EMS on August 17, 2009 but the same was received back with the postal remarks as "closed". It means notice was issued within the stipulated time and was dispatched at the address of the appellant given by him on the permanent account number card/form No. 49A which has never been changed and here it also worthwhile to mention that still, even today, the same address is existing in permanent account number in databank preserved by the Department as claimed by the appellan....
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....llayya Co v. State of Andhra [1958] 9 STC 24 (AP), Kondapalli Viraraju v. The State of Andhra [1958] 9 STC 42 (AP) ; Harmukh Rai Jairam Das v. The State [1952] 3 STC 153 (Patna) ; Sitaram Kamal Prasad v. Collector of Sales Tax [1955] 6 STC 339 (Orissa), The State of Orissa v. Chakobhai Ghelabhai and Co. [1960] 11 STC 716 (SC). Now, reference may be made to section 292B. Where there is only an irregularity in the exercise of jurisdiction, the irregularity could be waived (Sri Shew Shakti Oil Mill v. Member, Board of Revenue I.L.R. (1949) 2 Cal 34). In other words, where the basic jurisdiction exists, the doing of things required to be done in the exercise of that jurisdiction may be waived and where a party has acquiesced in or waived an irregularity, he cannot afterwards complain of it (Marsh v. Marsh [1945] AC 271, Ex Parte Pratt, In re [1884] 12 QBD 334, 339 ; Gurdev Singh v. Chandrika Singh ILR 36 Cal 193 ; Madanlal Mahawar v. CTO [1965] 16 STC 1071 (Cal)). Such waiver may be referred to from the assessee having appeared and prayed for time (Madanlal Mahawar v. CTO [1965] 16 STC 1071 (Cal)). Therefore, there is no fault or failure of the Assessing Officer for not issuing notice ....
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.... which is placed in compilation, the address of the assessee was given as : "Room No. 7, 87, Kika Street, Gulalwadi, Mumbai, Maharashtra" but notice under section 143(2) was sent at the address C/o. 13/15, Room No. 27, Anantwadi, 3rd Floor, Bhuleshwar, Mumbai. He submits that when there was address on the return of income which was selected for scrutiny, the Assessing Officer must have issued notice on the said address. He placed his heavy reliance on the following decisions : (i) Hotel Blue Moon [2010] 321 ITR 362 (SC) ; (ii) CWT v. HUF of H. H. Late J. M. Scindia [2008] 300 ITR 193 (Bom) ; (iii) CIT v. Mundra G. Nanavati [2009] 227 CTR 387 (Bom) ; (iv) Kuber Tobacco Products P. Ltd. v. Deputy CIT [2009] 310 ITR (AT) 300 (Delhi) ; and (v) ITO v. Mohd. Khaliq [2011] 60 DTR (Lucknow) (Trib) 196. He submits that the Revenue authorities cannot take the shelter of section 292BB of the Act as the said section is applicable from the assessment year 2008-09 and not prior to that. He submits that service of the notice under section 143(2) is not procedural irregularity but being mandatory non service of the same is an illegality which is non-curable. He pleaded for cancellin....
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....ted fact, but as the assessee appeared in the assessment proceedings and hence, the assessment proceedings are not vitiated. So far as present issue is concerned, there are following aspects which are to be considered ; (i) whether it is mandatory on the Assessing Officer to issue notice under section 143(2) if the return filed by the assessee is selected for scrutiny ; (ii) what is the time limit for issuing the notice under section 143(2) as well as time limit for serving the notice to the assessee ; (iii) whether it is mandatory on the part of the Assessing Officer to serve the notice within the prescribed time limit under section 143(2) ; and (iv) the impact of newly inserted section 292BB on this issue. In the case of Hotel Blue Moon [2010] 321 ITR 362 (SC) the issue was in respect of block assessment under section 158BC. In consequence of search and seizure a return is filed by an assessee and the Assessing Officer decide to verify correctness of the income undisclosed declared by the assessee in the said return, their Lordships have held that the issuing notice under section 143(2) is a mandatory provision while interpreting the phrase "so far as....
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....is by incorporation. This section even speaks of sub-sections which are to be followed by the Assessing Officer. Had the intention of the Legislature been to exclude the provisions of Chapter XIV of the Act, the Legislature would have or could have indicated that also. A reading of the provision would clearly indicate, in our opinion that if the Assessing Officer, for any reason, repudiates the return filed by the assessee in response to notice under section 158BC(a), the Assessing Officer must necessarily issue notice under section 143(2) of the Act within the time prescribed in the proviso to section 143(2) of the Act. Where the Legislature intended to exclude certain provisions from the ambit of section 158BC(b) it has done so specifically. Thus, when section 158BC(b) specifically refers to applicability of the proviso thereto cannot be excluded. We may also notice here itself that the clarification given by the Central Board of Direct Taxes in its Circular No. 717, dated August 14, 1995 ([1995] 215 ITR (St.) 70), has a binding effect on the Department, but not on the court. This circular clarifies the requirement of law in respect of service of notice under sub-section (2) of s....
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....essment framed under section 17 of the Wealth-tax Act. The assessee contended that as per the provisions of section 17 of the Wealth-tax Act, it is mandatory on the part of the Assessing Officer to issue the notice under section 16(2) of the Act in the case when the Assessing Officer decides to verify correctness of a return filed by the assessee. The assessee agitated the issue by taking the stand that the Assessing Officer was required to issue the notice under section 16(2) of the Wealth-tax Act within time-limit of one year from the date of filing of the return but the same was issued after expiry of one year. Their Lordships referred to sections 143(2) and 148 of the Act and held as under (page 200) : 9. Let us now examine sections 143 and 148 of the provisions of the Income-tax Act, where similar language had been employed. Under section 143(2)(ii) there is a limitation on the Assessing Officer not to issue notice if the period of twelve months had expired. Section 148 of the Income-tax Act had come up for consideration before several High Courts. A learned Bench of the Madras High Court in CIT v. M. Chellappan [2006] 281 ITR 444 (Mad) had occasion to consider the provisio....
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....e one hand and section 17 on the other. In our opinion, there is no escape from arriving at the conclusion that when the Assessing Officer invokes section 17, the provisions of sections 14 and 16 to the extent applicable, for the purpose of making an order of reassessment will have to be followed which will include the time-limit for notice under section 16(2). Once the language of section 17 itself requires that other provisions to the extent applicable would apply considering the return as filed under section 14, it contemplates that both procedural and substantive provisions will apply. In our opinion, therefore, while invoking powers under section 17, the Assessing Officer is bound by the mandate of the proviso to section 16(2) and on failure the order of reassessment will be without jurisdiction and consequently the order of reassessment will have to be set aside." Now, the law is well-settled that it is mandatory on the Assessing Officer to issue the notice under section 143(2) and serve the same on the assessee within 12 months from the end of the month in which the assessee has filed the return of income. The mode of service of the notice is given under section 282 of th....
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...., to section 292B of the Act introduced with retrospective effect from October 1, 1975. Thus, to challenge the validity of a particular action of the Department of making assessment or reassessment on the basis of invalid issuance/service of notice had become right of litigant assessee during the course of appellate proceedings even though such contention was never raised during the course of assessment proceedings. Instances of striking down the validity of assessment and reassessment proceedings have already been discussed in the earlier part of this order. By insertion of section 292BB such right of the assessee to challenge the validity of assessment or reassessment proceedings during the course of appellate proceedings has been taken away by the statute with effect from April 1, 2008. It is also observed that the issue and service of notice relates to procedural law, but, at the same time, it created a new disability on the assessee litigant to the extent that he is debarred from taking a plea in the appellate proceedings to challenge the validity of the same on the ground of valid issuance/service of notice required to be given by the statute in a case where the assessee has ....
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....on'ble High Court decided the question in favour of the Revenue and, thus, the matter went to the hon'ble Supreme Court and their Lordships of the hon'ble Supreme Court have observed that the law is well-settled that the Income-tax Act as it stands amended on the 1st April of any assessment year must apply to that assessment year. Any amendments in the Act which come into force after the 1st day of April of an assessment year, would not apply to that assessment year, even if the assessment is actually made after the amendments come into force. Their Lordships referred to the earlier decision of the apex court in the case of Scindia Steam Navigation Co. Ltd. v. CIT [1961] 42 ITR 589 (SC) in which similar proposition of law was laid down while interpreting section 10(2)(vii) and proviso (iv) and section 66(1), (2) and (5) and in the said case it was held that the proviso though came into force on 5th May, 1946 could not be made operative from 1st April, 1946 and, therefore, no retrospective effect could be given to that provision by accepting the contention of the Revenue. In that case the Revenue has sought to apply the proviso for the assessment year 1946-47 despite the fact that t....
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....see was not liable to pay tax on the sum because the fourth proviso to section 10(2)(vii) of the Income-tax Act under which it was sought to be taxed was not in force in respect of the assessment year 1946-47. 44. If the present issue is considered in the light of the above decision of the hon'ble Supreme Court, then, it has to be held that section 292BB is applicable to the assessment year 2008-09 and subsequent years. Therefore, answer to the second aspect of the question is that the assessee is precluded from taking such objection for and from the assessment year 2008-09. 45. Summarising our findings, we hold as follows : (i) section 292BB, even if it is procedural, it is creating a new disability as it precludes the assessee from taking a plea which could be taken as a right, cannot be construed retrospectively as the same is made applicable by the statute with effect from 1st April, 2008. (ii) section 292BB is applicable to the assessment year 2008-09 and subsequent assessment years." We, therefore, respectfully following the principles laid down by the hon'ble Special Bench in the case of Kuber Tobacco Products P. Ltd. [2009] 310 ITR (AT) 300 (Del....